INFOBAE – The Government managed to close the debt swap under foreign legislation this Friday with an adherence far exceeding 90%, according to high official sources. In this context, economists consulted by infobae celebrated the measure, gave an account of the benefits of avoiding a default although they warned that there is still a need to correct economic imbalances such as the fiscal deficit.
In dialogue with this medium, the director of the Eco Go consultancy, Martín Vauthier, said that if these percentages of adherence to the exchange are confirmed, it remains to be known what happens with the bonds “series by series” to definitively avoid holdouts.
“That will be important to analyze when we have the disaggregation of the participation by series of the exchange. The percentage of global adhesion is very important ”, highlighted the economist.
In that sense, he remarked that if the default and litigation can be left behind, “it is a necessary and very important condition to be able to stabilize the Argentine economy in the short term and to think about growing again once the pandemic is left behind. of coronavirus beyond the rebound effect”.
“I think this is positive news for the exchange market and for what the gap is. Today the economy has a very significant fiscal gap that was enlarged by the pandemic. The deficit was financed with monetary issuance due to the lack of credits and savings. That is why it is important for the Government to offer signals in the fiscal field that it aims to reduce the deficit. And also that it gives signals in the monetary and financial field”, he considered.
Regarding the possibility of financing the government, he said that it will not happen in the short term. “Argentina needs to give other signals, of greater certainty and confidence. The Government is not going to access global markets and it does not need them either, given the expiration schedule”, he said. Today the economy has a very significant fiscal gap that was widened by the pandemic. The deficit was financed with monetary issuance due to the lack of credits and savings. That is why it is important for the Government to offer signals in the fiscal field (Martín Vauthier)
In turn, Aldo Abram, head of the Fundación Libertad y Progreso, affirmed that, in principle, adhering to the debt swap “means very good news for Argentines.”
However, he warned that it would be a mistake to think that all the country’s problems were solved. “It is true that the prospect of a default would be extremely serious for the future and well-being of Argentines. The fact of being able to remove a default from the horizon clearly improves everyone’s expectations”, If you have a default on the horizon, that reduces uncertainty, decreases people’s preference for saving and leaking money (Aldo Abram)
In that order, he stressed that when people have high uncertainty in Argentina, what they do is save and buy dollars and take them abroad “or send them to the bottom of the closet.” And he added that what it does is underfund the economy so “consumption and investment fall and consequently economic activity.”
“If you have a default outside the horizon, that reduces uncertainty, decreases people’s preference for saving and running money. By reducing savings, you spend and invest more and that helps recovery. But the improvement is going to be temporary as long as the underlying problems that bring us from crisis to crisis are not resolved”, he warned.
Meanwhile, he acknowledged that he can expect more financing for the public sector than he has had so far. And he added that the exchange “opens the possibility of increasing financing to the productive private sector, which was obviously limited by the possibility of a default.”
Matías Carugati, executive director of the consulting firm Seido, told infobae that having reached an agreement with the most important groups of creditors, the activation of the credit unions was guaranteed. And he added that with that, the acceptance percentage was known to be high, since those who did not enter the exchange voluntarily were going to receive relatively worse bonuses.
“The important thing, beyond the epic that wants to be given to the issue, is that Argentina came out of its ninth default. A little less uncertainty for an already quite complicated macroeconomic scenario, beyond the debt issue. Now we will have to do the things that correspond to avoid a tenth default. Building fiscal credibility would be a success”, he emphasized.
Impact on the foreign exchange market
In terms of what it does to the exchange rate, Abram considered that a positive impact may be seen in the parallel dollars.
“I see less likely that this is reflected in the official dollar because its value is artificially fixed and is far from reflecting the true depreciation of the peso. There the impact will be very low. With respect to the official dollar, the stocks lead to restrictions increasing over time and not decreasing. We had that experience between 2012 and 2015, but now we watch the same movie fast forward. We should be forewarned because we are rapidly going into a currency and exchange crisis, “he explained.
For Carugati, in the short term it is possible that the financial exchange situation will relax a little, but perhaps not much. “The market was already discounting the result of the exchange from the moment it was agreed with the main groups of bondholders. Furthermore, let’s not forget that the debt issue was one of several sources of uncertainty, and not the most relevant in the short term. The fiscal-monetary imbalance is today (in my opinion) the main factor that explains the macro dynamics”, he said.
For his part, the economist Gustavo Ber, from the study of the same name, stated that this percentage of adherence to the swap is a very auspicious event that “would enable less exchange rate tensions, by also combining with the position of new bonds that the BCRA will receive and would allow raising the reserves as well as influencing the dynamics of financial dollars”.
“In order for strategic investors to regain a greater appetite for domestic assets, beyond technical rebounds against trading bets after the recent weakness, progress will be needed in negotiations with the IMF and an economic plan that aims at fiscal and monetary convergence. , with the presentation of the Budget possibly being able to provide signals”, he assured.
What can happen to investments
According to the economist Carugati, in the short term there would not be much impact on investments because the situation is what dominates. “With a longer horizon, getting out of default is always good because it allows us to think about the possibility of investment arrival and access to financing at reasonable costs”, he said.
For Abram, there is not going to be a resurgence of investments. “No one is going to come to invest in the country where there are more than 67,000 regulations that suffocate SMEs and entrepreneurs. Nobody is going to come to invest for the Government to manage the company”, he said, while adding: “It is impossible for you to have someone with the intention of investing, it is Argentina when we are a country that squeezes its companies with taxes. In this country the AFIP makes a reform to raise taxes and not to lower them”.
How the debt restructuring process continues
After processing all the information on adhesion to the exchange, the Palacio de Hacienda will announce the results next Monday, as defined in the offer prospectus and on September 4, the liquidation will be carried out, since Investors will hand over their old securities and receive the new ones. On Monday 7, the bonds arising from this financial operation will begin to be listed, IMF head Kristalina Georgieva together with the Minister of Economy Martín Guzmán. From now on, the Government will have to begin an almost as tough negotiation with the International Monetary Fund (IMF), with which it must restructure some USD 45,000 million. REUTERS / Remo Casilli. The head of the IMF Kristalina Georgieva with the Minister of Economy Martín Guzmán. From now on, the Government will have to begin an almost as tough negotiation with the International Monetary Fund (IMF), with which it must restructure some USD 45,000 million. REUTERS / Remo Casilli.
The Government would have managed to reach the majorities provided for in the Collective Action Clauses (CAC) of the bonds that have indenture 2016 (the global ones, issued during the macrismo), but it still had to reach the necessary numbers in some series of the indenture bonds 2005, which require higher adhesion percentages to drag the rest. On Monday, the 7th, the bonds arising from this financial operation will start trading.
In this way, Argentina will try to stretch maturities and reduce its commitments through new debt securities in dollars and euros with maturity in the years 2030, 2035, 2038, 2041 and 2046.
With this exchange operation, Argentina will be able to reduce the interest payment by practically half, saving about 35,000 million dollars and the capital will contract to 5% in some global bonds.
Argentina will improve its debt profile after the exchange and the new bonds would have an exit rate of return lower than the current one, between 10 and 11%, estimate private analysts.
It should be remembered that to a first offer presented on April 16 and that was rejected by the majority of creditors, Argentina then made two amendments, the most recent on August 4 with which it obtained the approval of the main investment funds, with about half of the bonds in your portfolio.
From now on, the Government will have to begin an almost as tough negotiation with the International Monetary Fund (IMF), with which it must restructure some USD 45,000 million.
Upon assuming the Presidency last December, Alberto Fernández suspended that stand-by agreement and renounced the pending tranches of the agreement, considering that the Argentine debt was not sustainable.
